Scoring extensions and avoiding penalties

Failure to give written notice of delay properly may expose a party to liquidated damages for late completion. The first instance decision in Steria Limited v Sigma Wireless Communications Limited provides useful guidance on whether giving written notice can ever be a condition precedent to an entitlement to an extension of time, and the form such a notice should take.

The judgment also addresses the issue of whether a liquidated damages clause amounts to a penalty or not. This case goes a step further than that of Multiplex Construction v Honeywell Control Systems [2007]. In this case the entitlement to liquidated damages was directly linked to the condition precedent.

Wragge & Co acted for Steria.

Read our analysis to find out more about the judgment.

For an update on the steps you can take, see our action points.